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Friday, October 24, 2014

Daily update 10/24

A late day push moved SPX up through the 100 DMA and just below the 50.  Here is the SPX daily chart.

SPX closed back above the 2011 trend line.  Even in this bull market of V bottoms I don't think we have seen one as sharp as this one.  Volume dropped off considerably today.  Breadth was 59% positive so it has started to wane a bit.  There were 92 new highs and 26 new lows.  The new highs dropped a good bit from yesterday.  They need to be getting stronger so that needs to be watched.  Lets see how the futures chart looks.

Futures popped a little bit more after the 4 PM close so people were anxious to be long over the weekend.  They have cleared both the 100 and 200 SMAs, but are approaching a potential resistance zone.  Take a look at the futures 60 minute chart I showed last night.

The up move lost some momentum and the futures slipped below the trend line but never confirmed a reversal.  This afternoon they went crawling up the bottom side.  Its not so easy now to tell if it is reversing with this line.

SPX's 50 DMA should be the stiff resistance.  As short term over bought as we are combined with the magnitude of the move up it should mean we pause here.  A pullback would be normal and would not necessarily kill the rally.  It could end up setting the stage to test the highs.  IWM spent much of the day in the red before the afternoon push higher took it positive.  It closed only .01 above the high from two days ago.  It appears to be stalling out and has underperformed SPX for three days now.  Remember it was outperforming a few days before SPX made the low.  This is something to keep an eye on.  Maybe it gets a burst of energy and maybe it doesn't.

Monday seems likely to touch the 50 DMA at 1966.  There may be some resting sell orders there that kick the market back some.  We saw that at the 100 yesterday.  There may be more of them at the 50 though.  Wed. is the next FED announcement where QE will be terminated.  The last buying operation is scheduled for Monday.  No more on the docket after that.  Of late the market has often gapped up the day before the meeting which would be Tues.  I don't know how all this will affect SPX with its interaction around the 50.  I guess we will have to watch and see.

They really paraded the bulls out on CNBC today.  Retail investors were chastised for selling.  We should not be selling we should be buying.  The market is headed higher for the next 2 decades.  Don't be stupid.  The full court press is on to get the retail crowd to hold on if the market goes down.  It seems to be working as the sentiment surveys indicate the retail investors are pretty bullish here.  Look at the latest AAII bulls chart.

The bulls zoomed up to 49% this week.  That is almost as high as it was just before this collapse started.  It is also near the high end of the range since 2011.  Who is going to be right?  The institutional investors that sold or the retail investors that are holding on and probably buying more.

The market and sector status pages have been updated.  Have a great weekend.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.